The Commissioner Of Service ... vs M/S. Crisil Ltd
2017 Latest Caselaw 7088 Bom

                                                      24-CEXA-152-2017.DOC




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       IN THE HIGH COURT OF JUDICATURE AT BOMBAY
            ORDINARY ORIGINAL CIVIL JURISDICTION

           CENTRAL EXCISE APPEAL NO. 152 OF 2017


 The Commissioner, Service Tax - V
 Mumbai.
 4th Floor, Utpad Shulk Bhavan, Plot No. C-
 24, Sector - E, Bandra Kurla Complex,
 Bandra (E), Mumbai - 400 051.                               ...Appellant

         Versus

 M/s. Crisil Ltd.,
 Plot No. 121/122, Andheri Kurla Road,
 Andheri E), Mumbai - 400 093.                          ...Respondent


 Mr. M. Dwivedi, with Mr. Sham Walve for the Appellant.
 Mr. R.G. Sheth, with Ms. Pinky Dayal Chainani, i/b. R.G.
      Sheth, for the Respondent.


                               CORAM:   A.S. OKA AND
                                        RIYAZ I. CHAGLA, JJ.

DATED: 13th September 2017

O R A L J U D G M E N T :- (Per Riyaz I. Chagla J.)

1. The Appellant by the present Appeal is challenging

order dated 18th May 2016 passed by the Customs, Excise

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and Service Tax Appellate Tribunal, West Zonal Bench at

Mumbai (for short "Appellate Tribunal").

2. The Respondent undertakes "Financial Advisory

Services" in respect of energy, banking, development,

finance, transport and urban infrastructure, disinvestment and

risk management. The Appellant was paying service tax on

the aforementioned services under the head of "Banking and

other Financial Services" with effect from 16th August 2002.

A show cause notice dated 20th February 2003 was issued

for the period 1999-2000 to 2001-2002 demanding service

tax of Rs.1,50,42,302/- by classifying the Financial Advisory

Services rendered by the Respondent under the category of

"Management Consultancy Service". By an Order-in-Original

dated 31st October 2011, the Adjudicating Authority viz.

Commissioner of Central Excise, Thane - I confirmed the

demand of Rs.1,50,42,302/- along with interest thereon and

imposed penalties under the provisions of Finance Act, 1994.

The Respondent being aggrieved by the Order-in-Original

dated 31st October 2011 preferred an Appeal before the

Appellate Tribunal. The Appellate Tribunal allowed the Appeal

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of the Appellant and set aside the order of the Adjudicating

Authority dated 31st October 2011. The Appellant has

challenged the impugned order in the present Appeal.

3. Mr. Dwivedi the learned counsel for the Appellant has

submitted that the Financial Advisory Services provided by

the Respondent falls under "Management Consultancy

Services" and would be liable to service tax prior to 16th

August 2002 when the Advisory and Financial Services were

included in "Banking and other Financial Services". He has

contended that the Financial Advisory Services would fall

within the definition of "Management Consultant" under

Section 65 (37) of the Finance Act, which reads thus:-

"Management Consultant" Under Section 65 (37) means, 'any person who is engaged in providing any service, either directly or indirectly in connection with the management of any organisation in any manner and includes nay person who renders any advice, consultancy or technical assistance relating to conceptualising devising, development, modification, rectification or up-gradatggion of any working system of any organisation.

24-CEXA-152-2017.DOC

He contends that from a plain reading of the definition

of "Management Consultant" it would be clear that the

Financial Advisory Services were a part of the service carried

out by a "Management Consultant". He has contended that

the Appellate Tribunal has erroneously arrived at a finding

that the said services were not a part of Management

Consultancy Services prior 16th August 2002 and therefore,

not taxable prior to the said date.

4. The learned counsel appearing for the Appellant has

supported the impugned order.

5. We have carefully considered the arguments. We

observe that the Financial Advisory Services undertaken by

the Respondent have been introduced for the first time in

"Banking and other Financial Services" with effect from 16th

August 2002. The definition of Banking and other Financial

Services reads thus:-

"Banking and other Financial Services" means, 'the following services provided by a banking company or a financial institution

24-CEXA-152-2017.DOC

including a non-banking financial company, namely -

(a) financial leasing services including equipment leasing and hire-purchase by a body corporate;

(b) credit card services;

(c) merchant banking services;

(d) securities and foreign exchange (forex) broking

(e) Asset management including portfolio management, all forms of fund management pension fund management, custodial depository and trust services, but does not include cash,

(f) Advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; and

(g) Provision and transfer of information and data processing".

6. From the definition of Banking and other Financial

Services, it is clear that Financial Advisory Services were

included as a part of the said services. Insofar as

"Management Consultancy Services" are concerned these

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have at all times been under the Finance Act and chargeable

to service tax. This would be the case even after the

inclusion of Advisory and Auxiliary Financial Services under

"Banking and other Financial Services" on 16th August 2002.

The definition of "Management Consultant" has also

remained unchanged. The department has also not raised

any objection to classifying the Financial Advisory Services

under "Banking and other Financial Services". We are,

therefore, of the view that it is not open for the Appellant to

take a contrary stand viz. that the Financial Advisory Services

were falling under "Management Consultancy Services" prior

to 16th August 2002. The Appellate Tribunal have also

observed that the Board Circular dated 7th October 1998

categorically clarified that information and advisory services,

if any, rendered by credit rating agency would not attract

service tax. We accordingly are of the view that the Appellate

Tribunal has arrived at correct finding that the advisory

services provided by the Respondent does not fall under

category of "Management Consultancy Services" and is

correctly classified under the "Banking and other Financial

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Services", and hence the same was not taxable prior to 16th

August 2002.

7. In the circumstances, we dismiss the present Appeal.

There shall be no order as to costs.

       ( RIYAZ I. CHAGLA J. )            ( A.S. OKA, J. )